{"id":80046,"date":"2023-11-02T23:30:51","date_gmt":"2023-11-03T03:30:51","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/10x-genomics-inc-txg-q3-2023-earnings-call-transcript\/"},"modified":"2023-11-02T23:30:54","modified_gmt":"2023-11-03T03:30:54","slug":"10x-genomics-inc-txg-q3-2023-earnings-call-transcript","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=80046","title":{"rendered":"10x Genomics, Inc. (TXG) Q3 2023 Earnings Call Transcript"},"content":{"rendered":"
\n

10x Genomics, Inc. (NASDAQ:TXG<\/span>) Q3 2023 Earnings Conference Call November 2, 2023 4:30 PM ET<\/p>\n

Company Participants<\/strong><\/p>\n

Cassie Corneau – Director, Investor Relations and Strategic Finance<\/p>\n

Serge Saxonov – CEO and Co-Founder<\/p>\n

Justin McAnear – Chief Financial Officer<\/p>\n

Conference Call Participants<\/strong><\/p>\n

Patrick Donnelly – Citi<\/p>\n

Dan Arias – Stifel<\/p>\n

Kyle Mikson – Canaccord Genuity<\/p>\n

Dan Brennan – TD Cowen<\/p>\n

Salem Salem – Barclays<\/p>\n

Tejas Savant – Morgan Stanley<\/p>\n

John Sourbeer – UBS<\/p>\n

Mason Carrico – Stephens<\/p>\n

Michael Ryskin – Bank of America<\/p>\n

Justin Bowers – Deutsche Bank<\/p>\n

Rachel Vatnsdal – JPMorgan<\/p>\n

Operator<\/strong><\/p>\n

Thank you for standing by. My name is Aaron, and I will be your conference operator for today. At this time, I would like to welcome everyone to the 10x Genomics Third Quarter 2023 Earnings Conference Call. All lines have been placed in mute to prevent any background noise. After the speakers\u2019 remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.<\/p>\n

I would now like to turn our call over to Cassie Corneau, Director of Investor Relations and Strategic Finance. Please go ahead.<\/p>\n

Cassie Corneau<\/strong><\/p>\n

Thank you and good afternoon, everyone. Earlier today, 10x Genomics released the financial results for the third quarter ended September 30th, 2023. If you have not received this news release or if you would like to be added to the company\u2019s distribution list, please send an e-mail to investors at 10xgenomics.com. An archived webcast of this call will be available on the Investor tab of the company\u2019s website, 10xgenomics.com for at least 45 days following this call.<\/p>\n

Before we begin, I\u2019d like to remind you that management will make statements during this call that are forward-looking statements within the meaning of Federal Securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated and you should not place undue reliance on forward-looking statements.<\/span><\/p>\n

Additional information regarding these risks, uncertainties and factors that could cause results to differ appears in the press release 10x Genomics issued today, and in the documents and reports filed by 10x Genomics from time to time with the Securities and Exchange Commission. 10x Genomics disclaims any intention or obligation to update or revise any financial projections or forward-looking statements whether because of new information, future events or otherwise.<\/span><\/p>\n

Joining the call today are Serge Saxonov, our CEO and Co-Founder; and Justin McAnear, our Chief Financial Officer. We will host the question-and-answer session after our prepared remarks. We ask analysts to please keep to one question and one follow-up so that we may accommodate everyone in the queue.<\/p>\n

With that, I will now turn the call over to Serge.<\/p>\n

Serge Saxonov<\/strong><\/p>\n

Thanks, Cassie and good afternoon, everyone. On today\u2019s call, I will begin with a brief overview of our third quarter performance and update you on our progress across each platform. Then Justin will provide a more detailed look at our financials, business trends and updated outlook for the remainder of the year. After that, we\u2019ll open it up for your questions.<\/p>\n

Revenue increased 17% year-over-year to $154 million in the third quarter. Our results were once again driven by Xenium, as we continue to ramp operations and drive exceptional demand with researchers worldwide. We achieved strong growth despite continued headwinds in China and excluding China, our growth exceeded 20% during the quarter.<\/p>\n

Just like 10x catalyzed the single cell revolution, we\u2019re now offering in a new era of genomic analysis with Xenium. Our mission is bigger than any one technology or any one platform. Our goal has always been to provide scientists with new generations of tools to measure biology at the right resolution and scale. That is why we have invested in our three platforms. That is why we have invested in foundations: our innovation engine, commercial breadth and manufacturing scale. And that is why we firmly believe we\u2019re still just getting started.<\/p>\n

Now, let me share more about each platform. I\u2019d intentionally like to start today with Xenium, which we believe is the best performing platform for In Situ analysis. In the third quarter, revenue from our Spatial products exceeded $36 million, largely driven by the accelerated adoption and operational ramp of our Xenium platform. It\u2019s worth pausing here for a moment. Very few platforms ever achieved the type of success that our team has accomplished with Xenium in just the first three quarters of launch.<\/p>\n

Its steep adoption curve has put it on a truly special trajectory likely among the best in life sciences full history. We have always believed that Xenium has the potential to be one of the most transformative technologies in our industry in decades, which is why we deliberately brought the whole company effort and focus through its development and commercialization.<\/p>\n

Our R&D teams worked incredibly hard to build a high-performance system that just works in researchers\u2019 hands. Our operations teams put an incredible effort to enable the manufacturing ramp and we made the Xenium launch our top commercial priority this year.<\/p>\n

Now that we have awesome traction with our customers, it\u2019s clear that those efforts are paying off. It\u2019s been extremely energizing to see results start pouring out from our customers, showing how they are using Xenium in their own labs. For example, a team from Duke University recently published a study fueled by Xenium that sheds light on resistance mechanisms in a model of lethal pediatric brain tumors. We\u2019re thrilled to see how quickly researchers can go from initial install to groundbreaking results with Xenium, demonstrating the utility and ease of use of the platform.<\/p>\n

In addition, researchers at the University of Adelaide recently published the first side-by-side comparison of Xenium and another platform. This is the first public study to compare data run by a customer on adjacent tissue sections in their own lab with commercially available instruments. Across the board, the results are striking, validating Xenium\u2019s superiority and supporting our own analysis.<\/p>\n

This is the first real-world evidence generated by customers \u2013 for customers that show Xenium delivers better sensitivity, and the best positivity, the highest throughput, the best workflow, the best data analysis and much more.<\/p>\n

Most importantly, Xenium shines in biological comparisons, delivering better cell typing, better spatiality and better expression marker identification. This data is strongly consistent with the resounding feedback we hear from Xenium customers around the world and gives the researchers confidence that Xenium is clearly the right choice for In Situ analysis.<\/p>\n

Q3 demonstrated the continued progress we are making with Xenium across all fronts. Commercially, Xenium\u2019s differentiated features, great workflow and superior performance drove strong instrument demand among researchers worldwide. It\u2019s especially rewarding to our customers who are already running Xenium in their own labs order more instruments. We\u2019re also pleased to see customers make the switch from other In Situ platforms to take advantage of Xenium\u2019s performance.<\/p>\n

On the operations side, we\u2019ve continued to quickly ramp production to meet growing customer demand. As we previously announced, we surpassed 100 cumulative Xenium shipments in August, only eight months after launch. We\u2019ve continued to deliver on the R&D front too. In Q3, we introduced three new targeted gene panels, launched the 480-plex fully custom gene panel and deployed new on and off-board software to unlock our highest sensitivity and throughput yet.<\/p>\n

With well over half of our panel orders containing some level of customization, we also launched the Xenium Panel Designer, a self-service website that makes it easier for researchers to design custom panels to answer their specific research questions.<\/p>\n

We engineered Xenium to optimize performance not only at launch, but also for the long-term. We are already executing on an extensive multiyear product development roadmap designed to enable powerful research applications and build on Xenium\u2019s class-leading performance.<\/p>\n

In early 2024, we expect to launch a powerful new cell segmentation capability that multimodal and includes interior and membrane stains. Mid next year, we plan to launch 5,000-plex gene panels for mouse and human tissues that run in days, not weeks, and deliver high levels of specificity, sensitivity and throughput.<\/p>\n

We\u2019re also developing an in-line, high-plex protein assay to combine with the RNA assays on the exact same tissue section, which we also intend to introduce next year. This will extend the existing protein capabilities on Xenium beyond and immunofluorescence-based measurements.<\/p>\n

All-in, Q3 was a remarkable quarter for Xenium, strong demand and resounding enthusiasm from researchers reinforce our conviction that the spatial biology opportunity is at least as large as anything in the history of the industry. Our current position and our roadmap going forward, give us confidence that we will realize the full potential of this opportunity.<\/p>\n

Now turning to Visium, which we see as the leading NGS-based spatial technology. CytAssist continues to resonate well with customers who benefit from a better Visium workflow and better data. While demand for CytAssist moderated in Q3 relative to a strong launch quarter in the prior year period, we see a long runway for placements. There are thousands of customers who have tried Visium and haven\u2019t upgraded to CytAssist yet. In addition, we believe there are many thousands more who are well positioned to adopt Visium and CytAssist in the future.<\/p>\n

With CytAssist as the foundation, we continue to invest and innovate in the Visium franchise. Last quarter, we launched our Visium-CytAssist Gene and Protein Expression assay, which enables researchers to combine whole transcriptome spatial analysis with high-plex protein detection and H&E staining, all on the same tissue section.<\/p>\n

In addition, we\u2019re excited about all of the progress we are making on Visium HD, which will bring single cell scale resolution to unbiased spatial discovery. We said before, this is one of the hardest and most ambitious projects we\u2019ve ever taken on.<\/p>\n

Our teams have been working hard to deliver a fantastic product and our recent momentum has been driven in part by an acquisition we made earlier this year to accelerate the scaling manufacturing of Visium HD. We see this investment as an important enabler for delivering a superior quality product with superior economics at scale.<\/p>\n

Our team is generating absolutely breathtaking Visium HD data across various human and mouse tissues. We\u2019ve shared some of these stunning images with customers during our Spatial World Tour events, which is fueling even more excitement for this highly anticipated new offering. We look forward to sharing more updates as we get closer to launch.<\/p>\n

With the products and pipeline that we have in both our Visium and Xenium platforms, it\u2019s easy to see why we\u2019re so bullish about the opportunity ahead in Spatial. It\u2019s also exciting when the researchers combine our Single Cell and Spatial portfolios in network. We recently partnered with a biotech company that selected the Chromium and Visium platforms for a large-scale translational study involving many thousands of tumor samples.<\/p>\n

We believe this collaboration will result in clinically significant discoveries that transform how we diagnose, treat and ultimately cure cancer. This is just one of a number of examples that show how our customers are leveraging the power and potential of the full 10x portfolio to advance human health.<\/p>\n

Now, I\u2019d like to share more about Chromium, a clear leader in single cell analysis. In the third quarter, Chromium largely remained a regional story as we continue to navigate headwinds in China that pressure our global growth rates. As a result, worldwide Chromium revenue was flat during the quarter. In the Americas and EMEA, year-to-date Chromium growth was in the low-teens. However, we still believe Chromium has the potential for far more. There are three key points to make related to Chromium\u2019s performance.<\/p>\n

First, we strongly believe in the tremendous potential of the Chromium franchise and intend to fully capture the significant untapped opportunity that\u2019s still ahead. The cell is the fundamental unit of biology. The vast majority of biological research that could benefit from single cell measurements doesn\u2019t yet.<\/p>\n

We see this as we talk to new prospective customers intrigued about the potential of single cell. We see this when we talk to long-term users who are keen to scale up their studies. We see this when we talk to translational customers who are looking to unlock the biology hidden in their biobank samples.<\/p>\n

We have an incredible roadmap of upcoming product launches that will take the entire Chromium franchise to the next level. Raising the borrowing performance and with the economics to drive broader adoption.<\/p>\n

Second, we intentionally prioritized the Xenium product launch this year. The entire company has been intensely focused on ensuring the success of our customers with this game-changing product, and the results speak for themselves. We knew this decision potentially carried some risk as less of our focus was on driving Chromium growth. We\u2019re confident it was the right decision to make, particularly as we look long-term. We expect more balance moving forward which will help us deliver on Chromium\u2019s full potential.<\/p>\n

Finally, as excited and confident as we are about the Chromium opportunity ahead, our strategy has always been about the power of our full portfolio, offering a comprehensive suite of products that will enable researchers and eventually clinicians to interrogate biology in a way that\u2019s best for their work.<\/p>\n

In the near-term, this may mean there is some trade-offs in lab resources, mind share and even budgets among the most cutting-edge researchers. In the long-term, we see the opportunity for tremendous growth across the combination of our platforms driven by the vast unmet needs in addressing the complexity of biology.<\/p>\n

Our goal is to enable more researchers to do more single cell work and to use more samples in a process. Our exciting and robust new product roadmap is built around this imperative with several planned launches intended to open up larger studies and make single cell analysis more routine.<\/p>\n

Two recent announcements highlight additional capabilities we are bringing to the Chromium platform. In September, we launched our new high-throughput Feature Barcode multiomic profiling kit on the Flex platform. This offering enables researchers to gain more insights from a single experiment by detecting simultaneous gene and protein expression with the ability to run multiomic million cell experiments at a significantly lower price point.<\/p>\n

This launch is part of our long-term plan to broaden the menu of applications available on the Flex portfolio. In addition, we recently partnered with Beckman Coulter Life Sciences to expand our automation solutions for single cell assay workflows. As part of this agreement, we\u2019ll develop dedicated kits for using Beckman Coulter\u2019s broad installed base of automated liquid handlers.<\/p>\n

Not only are we working to enable more samples for single cell analysis, we\u2019re also working to enable more applications. We have established strong beachheads in translational and biopharma, but it\u2019s still very early relative to the expected large potential. We\u2019ve seen a number of recent customer publications that demonstrate the promise of single cell tools on the future of drug development and clinical care.<\/p>\n

On our blog, we recently highlighted a Phase II clinical trial that leveraged single cell analysis to study the efficacy of a combination therapy in a group of patients with a mutated metastatic colon cancer. Single cell data and correlative patient outcomes suggested the therapy was effective to extend progression-free survival in some patients, likely as a result of upregulating immune-related genes in tumor cells.<\/p>\n

In September, MIT Researchers published several papers using 10x products to reveal the transcriptomic and epigenomic changes that occur as Alzheimer\u2019s disease progresses. In one study, researchers use Chromium to analyze more than 2 million nuclei, isolated from more than 400 patients with varying degrees in clinical stages of Alzheimer\u2019s, producing the most detailed single-cell atlas of Alzheimer\u2019s disease and uncovering cell subtypes and pathways associated with cognitive resilience.<\/p>\n

And also this quarter, researchers at UCLA published their work in the Journal of Clinical Investigation to explain why immunotherapy is more effective for certain brain cancers than others. This study highlighted how Chromium and Visium are being used in parallel to make new discoveries that can transform the future of cancer care. Examples like these energize and inspire our team as we push toward our mission and work to bring the future forward.<\/p>\n

I\u2019m so proud of our team\u2019s continued execution and dedication. We like to say we\u2019re obsessed with customer success. That\u2019s evident in everything we do from our innovation engine to our manufacturing ramp to our field and commercial teams working tirelessly to support our customers and their groundbreaking research.<\/p>\n

As we look ahead to 2024, I\u2019m very excited about the robust pipeline of new product launches we have planned in all three platforms. We can\u2019t wait to see how researchers use these new tools with even higher levels of scale and resolution to fuel the next scientific discoveries.<\/p>\n

And we\u2019ll continue to focus on operating with ever higher levels of rigor, discipline and clock speed, dialing up both our efficiency and effectiveness to be in the best possible position for all of the incredible opportunities ahead. We believe Single Cell and Spatial are the future, and we have every intent to be the company that delivers on that future.<\/p>\n

With that, let me turn it over to Justin for more detail on our financials.<\/p>\n

Justin McAnear<\/strong><\/p>\n

Thank you, Serge. I\u2019ll start by reviewing our financial results for the three months ended September 30th, 2023. Then I\u2019ll provide an update on our outlook for 2023. To summarize, from an income statement standpoint, we saw exceptional performance from Xenium, which was above our expectations. And given its effect on product mix, this had a negative impact on overall gross margins.<\/p>\n

From a balance sheet and cash flow standpoint, we continued to be disciplined in our spending while being opportunistic on acquiring assets to accelerate our strategy. In the quarter, we closed on an acquisition which we signed earlier in the year to acquire certain intangible and other assets to accelerate our R&D pipeline. It\u2019s important to note, that net of the transaction, we were operating cash flow positive, and this will continue to be a focus of ours going forward.<\/p>\n

Now, on to the detailed results. Total revenue for the quarter grew 17% year-over-year to $153.6 million compared to $131.1 million for the prior year period. Looking more closely at our revenue breakdown and starting with Consumables, total Consumables revenue was $114.4 million, an increase of 6% over the prior year period. Worldwide Chromium Consumables revenue was $100.3 million, up 2% year-over-year and Spatial Consumables revenue was $14.1 million, up 38% year-over-year.<\/p>\n

Turning to instruments, total instrument revenue was $34.9 million, an increase of 67% over the prior year period. Chromium instrument revenue was $12.2 million, down 18% year-over-year, driven primarily by lower unit volume and shifting product mix. Spatial Instrument revenue was $22.7 million compared to $6 million in the third quarter of 2022. As a reminder, our Xenium instrument launched in Q4, so Xenium did not contribute to Spatial Instrument revenue in Q3 of last year. Services revenue was $4.3 million, which increased 110% over the prior year period.<\/p>\n

Looking at our revenue by geography. Americas\u2019 revenue was $99.0 million, growing 28% over the prior year period. EMEA revenue was $32 million, growing 15% over the prior year period. And revenue in APAC was $22.6 million, a 12% decrease year-over-year.<\/p>\n

We continue to face challenges in the APAC region, largely driven by China. On our last earnings call, we shared that we expected China revenue to remain flat in the back half of the year compared to Q2, which is what happened in Q3.<\/p>\n

As we continue to navigate challenges in the macro environment, we are seeing lower demand, particularly at service providers where a large portion of our revenue is concentrated and samples are consolidated. We\u2019ve been working with these service providers to better track underlying demand and smooth out ordering patterns to better control inventory levels going forward.<\/p>\n

Turning to the rest of the income statement, gross profit for the third quarter of 2023 was $95.5 million compared to a gross profit of $100.7 million for the prior year period. Gross margin for the third quarter was 62% compared to 77% for the third quarter of 2022. The decline in gross margin was driven by the strength of Xenium placements this quarter.<\/p>\n

I have shared that in the early quarters of Xenium adoption, we expected overall company gross margin to trend lower as more instruments are sold given that the Xenium instrument currently carries a significantly lower margin than our other instruments. We have seen a greater impact to gross margin given the strength and our prioritization of the Xenium launch.<\/p>\n

We plan to continue to prioritize Xenium placements over the coming quarters given the overwhelming enthusiasm we are receiving for this platform and its capabilities, which in turn will continue to impact gross margin in the near- term. As customers ramp up their Xenium utilization, the Xenium Consumables, which have a gross margin comparable to our existing products, will become a larger portion of the revenue and increase our overall margin over time.<\/p>\n

Total operating expenses for the third quarter of 2023 were $190.3 million compared to $140.7 million for the third quarter last year. The increase was driven by $41.4 million of in-process research and development expenses related to our January 2023 agreement to acquire certain intangible and other assets.<\/p>\n

The $41.4 million includes the upfront payment of $10.0 million earlier this year, $31.3 million paid in Q3 upon closing and the achievement of certain milestones and $0.1 million related to adjustments for assets and liabilities acquired.<\/p>\n

R&D expenses were $66.5 million compared to $67.3 million for the third quarter of 2022. The decrease was primarily driven by lower laboratory materials and supplies, partially offset by higher personnel expenses. SG&A expenses were $82.4 million compared to $73.4 million for the third quarter of 2022. The increase was primarily due to increased outside legal expenses and increased personnel related expenses.<\/p>\n

Operating loss for the third quarter of 2023 was $94.8 million compared to a loss of $40 million for the third quarter of 2022. This includes $41.4 million of in-process research and development expense. This also includes $40.2 million of stock-based compensation compared to $33.5 million of stock-based compensation for the corresponding prior year period.<\/p>\n

Net loss for the period was $93 million compared to a net loss of $41.9 million for the third quarter of 2022. We ended the quarter with $356.9 million in cash and cash equivalents and marketable securities, net of restricted cash.<\/p>\n

Turning to our outlook for the remainder of 2023, we are raising our guidance and now expect full year revenue to be in the range of $610 million to $625 million, representing growth of 18% to 21% over full year 2022. This compares to our previous expectation of $600 million to $620 million. Our updated guidance reflects our performance for the first nine months of the year as well as continued Xenium momentum.<\/p>\n

At 10x, we have a disciplined approach to spending and are continuing to execute across our business with a drive to become free cash flow positive in the near-term. We still expect a significant reduction in capital expenditures in the final quarter of this year. As expected, the payments for our new facility are now substantially complete.<\/p>\n

When looking out over the next 12 months, we are anticipating about $20 million to $25 million of total capital expenditures. In addition, relating to our acquisition, up to $15 million will be due if an additional technology development milestone is met. We also have agreed to certain milestone payments for future sales volumes if such milestones are met.<\/p>\n

There remains a path to hitting free cash flow positive by the end of this year, and we believe it will be close. We continue to balance that goal with the investments we are making in supporting our Xenium rollout and build on the incredible momentum to-date. The opportunity is huge and we will continue to push to expand our leadership in this space.<\/p>\n

It\u2019s also important to note that excluding the cash consideration for the aforementioned acquisition, our cumulative cash flow from operations has been positive over the last three quarters. Our teamwork and diligence in controlling spending, while continuing to drive growth is paying off, and we will maintain this discipline heading into 2024. Overall, we have a great setup to drive positive cash flows heading into next year.<\/p>\n

At this point, I\u2019ll turn it back to Serge.<\/p>\n

Serge Saxonov<\/strong><\/p>\n

Thanks, Justin. Given the progress we\u2019ve made executing on our three platform vision, my conviction in the long-term is stronger than ever. There are vast opportunities before us. I believe we\u2019re still early in the Chromium opportunity and a long way from realizing the full promise of Single Cell. In addition, the incredible customer enthusiasm for Xenium solidifies my view that Spatial has the potential to be bigger than anything in the history of the industry.<\/p>\n

There are many reasons why I\u2019m so bullish on what lies ahead: The fundamental performance advantages of our products, the formidable strength of our innovation engine, the scale of our operations network, the breadth of our commercial organization, but ultimately, it all comes down to the talent and tenacity of the 10x team.<\/p>\n

Day in and day out, our team works tirelessly in pursuit of our mission, developing groundbreaking tools to transform the world\u2019s understanding of health and disease. Their relentless focus on our mission and customers is a core part of what makes 10x, 10x. And why we\u2019re so well positioned to deliver on all the tremendous opportunities ahead.<\/p>\n

With that, we will now open it up for questions. Operator?<\/p>\n

Question-and-Answer Session<\/strong><\/p>\n

Operator<\/strong><\/p>\n

Thank you, Mr. Saxonov. [Operator Instructions] Our first question comes from the line of Patrick Donnelly with Citi. Your line is live.<\/p>\n

Patrick Donnelly<\/span><\/strong><\/p>\n

Hey, guys. Thank you for taking the questions. Serge, maybe on the Xenium piece, it sounds like the order funnel remains pretty healthy. Any metrics you can kind of throw around that? I think last quarter, you said orders outpaced placements. So anything you can share on the backlog or activity on that order side would be \u2013 appreciated.<\/p>\n

Serge Saxonov<\/span><\/strong><\/p>\n

Thanks, Patrick. Yeah. So like I said, Xenium has had tons of momentum this quarter, increasing momentum, really excited how it\u2019s been going, in particular, the performance of it \u2013 with customers out there in the field has been really phenomenal, and the feedback from customers has been really phenomenal. And so that has been building up to this momentum that we\u2019ve been seeing an increasing traction there in the field.<\/p>\n

We had – we don\u2019t comment on backlog generally. This time around, just to give a sense of the momentum. We did \u2013 our backlog increased once again. We shipped more than \u2013 we sold more than 80 instruments and clearly showing just the trajectory here that\u2019s really remarkable, which is what I was alluding to in my comments as well.<\/p>\n

Patrick Donnelly<\/span><\/strong><\/p>\n

Okay, that\u2019s helpful. And then maybe just it might be for Justin. Just on the Chromium Consumables side, can you just help us think about the right growth rate for the year on that front? And also just trying to think about what the exit rate is there and the implications for \u201824. Just the right way to think about that business as maybe it\u2019s a little bit more \u2013 obviously more mature than Xenium. I\u2019m just trying to get a good handle on the growth rate there and the right way to think about it. Thanks.<\/p>\n

Justin McAnear<\/span><\/strong><\/p>\n

Yeah, so Chromium overall has been a regional story. And so we talked about the challenges that we\u2019ve seen in China. But when looking at AMR and EMEA, you look at Chromium Consumables year-to-date, they grew mid-to-high teens over last year. And if you look at our updated guidance range, we\u2019re assuming at the midpoint of that range.<\/p>\n

Heading into Q4 is that, the existing business would exhibit the same kind of year-over-year growth rates that we saw in Q3 for AMR and EMEA, and similar sequential growth rates from Q3 to Q4 that we saw last year.<\/p>\n

Patrick Donnelly<\/span><\/strong><\/p>\n

Okay. Thank you \u2013<\/p>\n

Operator<\/strong><\/p>\n

Thank you for your question. Our next question is from the line of Dan Arias with Stifel. Your line is live.<\/p>\n

Dan Arias<\/span><\/strong><\/p>\n

Yeah. Hi, guys. Thanks for the questions. Serge, on Xenium, can you just maybe talk to how you see the adoption curve evolving there? I mean, I know we\u2019re not talking about 2024. But when you think about the next 12 months to 18 months at a high level, do you see the potential for a pause as that first wave of, I guess, sophisticated users get their systems? Or does the way that the market is expanding, and I guess the way that the product is being received, does that suggest that maybe that doesn\u2019t happen?<\/p>\n

Serge Saxonov<\/span><\/strong><\/p>\n

Yeah, Dan. Good question. We hesitate to comment on 2024. Still early, obviously. But as far as the trajectory of the Xenium launch, it is clearly on a different tier compared to sort of your certainly typical launch as you alluded to in this in the industry where you get some early adoption and then kind of a wave and then we\u2019ll see what happens after that. This one is going on a really, really strong trajectory. And there\u2019s a lot of science of strength going forward as well.<\/p>\n

You do have to assume that there is some amount of initial pent-up demand, but overlaid on top of that, we\u2019re seeing a great sustained trajectory of customers seeing the results from the data and coming back to us and ordering more instruments and thinking of more studies and thinking of larger and larger applications. So I think we\u2019ll have to see how it plays out, but the early signs are quite bullish.<\/p>\n

Dan Arias<\/span><\/strong><\/p>\n

Okay, fantastic. Thank you. And then just maybe in the interest of keeping on top of the litigation, you\u2019ve got this Delaware trial on genomics infringement this month. It\u2019s a week and a half from now, if I\u2019m not mistaken. Caveat there being, I know you don\u2019t get too detailed on the legal stuff, but what are your general expectations there? And then what do you think about the timing for a final ruling? And what should be keeping in mind here?<\/p>\n

Serge Saxonov<\/span><\/strong><\/p>\n

Yeah. So, I hesitate to comment on any particular case. You\u2019re correct. There\u2019s a trial that\u2019s scheduled to start shortly, within a couple of weeks. I would say that, we do have multiple cases going on in multiple jurisdictions on multiple products and multiple patents. So it\u2019s not really about any particular case or any particular trial. What is important to us is that, we invest a lot in innovation. We invest a lot in R&D and it\u2019s incumbent enough to protect those investments so that we can keep investing in R&D, in our products to deliver best-in-class products that our customers love.<\/p>\n

Dan Arias<\/span><\/strong><\/p>\n

Okay, appreciate it.<\/p>\n

Operator<\/strong><\/p>\n

Thank you for your question. Our next question is from the line of Kyle Mikson with Canaccord Genuity. Your line is live.<\/p>\n

Kyle Mikson<\/span><\/strong><\/p>\n

Hey, guys. Thanks for taking the questions. Congrats on the awesome Xenium ramp. So on the \u2013 like Spatial Consumables side, it grew well in the quarter. I guess it could have expected like a faster kind of rates and there were the macro headwinds. Could you comment maybe, Serge, like how Xenium utilization is trending like thus far is it close to inflecting possibly? And are people kind of slowing down or pausing ordering in front of the Visium HD launch because it sounds like an early \u201824 situation? Thanks.<\/p>\n

Serge Saxonov<\/span><\/strong><\/p>\n

So when it comes to Xenium and utilization, it\u2019s too early to talk about patterns. We have a wide dispersion of customers and how quickly they are able to ramp. We can certainly point to examples of people who are ready to go from almost day one, both with samples and applications, for others is going to take longer.<\/p>\n

In particular, I\u2019d like to remind people that this platform necessitates, it\u2019s built around targeted panels, which means, in a lot of cases, it necessitates some amount of customization where people have to go through the process of selecting and choosing genes for gene panel to then run an instrument.<\/p>\n

And that means, that there is a certain amount of ramp up that many customers need to go through. So early days, there are some really promising signs. Again, there are some customers that really go run large studies at large \u2013 in large volumes, but there\u2019s a big dispersion. So, hesitate to make a projection, it\u2019s too early at this stage.<\/p>\n

As far as Visium is concerned, I mean, it is undoubtedly true that there\u2019s a lot of anticipation for Visium HD out there in the market. And certainly, a lot of our customers eager for that product have been holding off potentially on running the standard kit.<\/p>\n

Kyle Mikson<\/span><\/strong><\/p>\n

Okay, that was helpful, sir. Thanks for that. And can you also comment on the biopharma end market, how that\u2019s going for you? Like what percentage of revenue is at this point, how fast is it growing? And I know that like connecting factors supposed to help there. Is that kind of playing out as you anticipated? And are people actually using connected the habit.<\/p>\n

Serge Saxonov<\/span><\/strong><\/p>\n

So biopharma has been \u2013 as you know, biopharma has been a relatively stable fraction of our business in the neighborhood of 20% or so. We have seen some of just like everywhere else, there has been a tightening of budgets in biopharma recently. Again, relatively attenuated effect on our overall business just because it is a small fraction of the business. So we\u2019ll have to see how that plays out in the future.<\/p>\n

But as far as Connect is concerned, it has its use cases. But we\u2019ve seen sort of the need for automation out there, especially with pharma customers across a range of different applications and across different use cases. And with that in mind, we formed the partnership with Beckman Coulter. We provide a wide range of automation services and this should give us the means of scaling automation solutions to many, many thousands suppliers that use Beckman Coulter and to many others that can adopt it gradually.<\/p>\n

Kyle Mikson<\/span><\/strong><\/p>\n

Okay, perfect. Thanks for the time guys.<\/p>\n

Operator<\/strong><\/p>\n

Thank you for your question. Our next question comes from the line of Dan Brennan with TD Cowen. Your line is live.<\/p>\n

Dan Brennan<\/span><\/strong><\/p>\n

Great, thank you. Thanks for the questions. Maybe just the first one just on single cell. I think the prior guide was for high single-digit growth for the year. I\u2019m just wondering kind of what that is now? I know, Justin, you gave some math earlier. And Serge, I believe in the prepared remarks, you discussed this more balanced growth as you reallocate resources? Just kind of wondering what that would imply as we look ahead for single cell?<\/p>\n

Justin McAnear<\/span><\/strong><\/p>\n

Yeah, Dan, I\u2019ll start with talking about single cell. As far as China goes, maybe I\u2019ll start there. On the last call, we shared that we thought that the back half of this year would be roughly flat to Q2. And in Q3, we saw that to be the case. But we are seeing lower demand there. And although we\u2019ve been working at reducing the inventory levels, they still are higher, and we plan to reduce them even more in this next quarter. So, we\u2019re projecting that there\u2019s going to be a decline from Q3 to Q4 there.<\/p>\n

And then like I said before, for EMEA and AMR right now at the midpoint of the guide, we\u2019re expecting similar seasonality to what we\u2019ve seen in the past. And then, overall, for Chromium growth year-over-year, that\u2019s a single-digit growth rate when you put all of those together, yeah mid-single digits.<\/p>\n

Dan Brennan<\/span><\/strong><\/p>\n

Great. And then \u2013 go ahead, go ahead.<\/p>\n

Justin McAnear<\/span><\/strong><\/p>\n

So <\/p>\n

Dan Brennan<\/span><\/strong><\/p>\n

Oh, go ahead. Sorry.<\/p>\n

Serge Saxonov<\/span><\/strong><\/p>\n

No, I was just going to say kind of taking up what I said earlier in my prepared remarks, we strongly believe in single cell growth and the potential of the Chromium franchise going forward. You\u2019re right, we\u2019re going to be balancing our focus on our resources to put more emphasis relatively speaking, on Chromium. So that should yield results. And we also have a really, really exciting product roadmap that will further take the franchise to the next level and drive more growth.<\/p>\n

Dan Brennan<\/span><\/strong><\/p>\n

Great. And then maybe just on Spatial. It\u2019s hard. I mean, the feedback we\u2019ve gotten has been really positive, just about the market opportunity and the ultimate size of the market, but it\u2019s always hard to project out into the future and see this kind of growth keep going up and up on placements.<\/p>\n

So I\u2019m just wondering from what you see today, could you just give us some sense of like the level of like placement, not necessarily a number, but like is it fair to think placements can continue to grow certainly in like \u201824 and \u201825, without putting a number on it like grow year-over-year. Obviously, you\u2019re on the steep ramp now, but just to kind of help us think about how many labs would actually look to adopt Spatial in the future? They\u2019re not cheap boxes, but they are offering some really unique capabilities. Thank you.<\/p>\n

Serge Saxonov<\/span><\/strong><\/p>\n

So, Dan, I would think in terms of maybe two kind of variables. As I look at this. One is just the trajectory in the moment, which is kind of like you suggested up and to the right, which gives us a good \u2013 some amount of confidence going forward. And then I also think in terms of the potential market and the breadth of applications and experiments that people are thinking about. And that also, at this stage, looks very healthy and very robust, which also makes us, I think, bullishly about next year and beyond.<\/p>\n

Dan Brennan<\/span><\/strong><\/p>\n

Great. Thanks, Serge.<\/p>\n

Operator<\/strong><\/p>\n

Thank you for your question. Our next question is from the line of Luke Sergott with Barclays. Your line is live.<\/p>\n

Salem Salem<\/span><\/strong><\/p>\n

This is Salem on for Luke. Thanks for the questions. Just wanted to start off with Chromium in China. You guys outlined or mentioned some struggles there. That\u2019s certainly not exclusive to 10x. We\u2019ve been hearing that all earnings season. But I just wanted some more color how much exposure in China is kind of biopharma-related, any more color there? And on timing, what do you think is kind of a realistic idea of when those issues will resolve themselves when you\u2019re working with your service providers?<\/p>\n

Justin McAnear<\/span><\/strong><\/p>\n

Yes, this is Justin. I\u2019ll take that one. As far as our exposure in China, we mostly sell to the academic market, our biopharma exposure. They\u2019re smaller than other companies that we\u2019ve heard from. As far as the demand looking forward, I mentioned earlier that we\u2019re looking at reducing inventory going from Q3 to Q4. We sell through distributors who sell through service providers there, they typically hold inventory.<\/p>\n

We\u2019ve been working more recently to get closer with those service providers to better forecast the demand and better help them manage the inventory levels and smooth the ordering patterns out going forward. So, I hesitate to call a bottom in what we\u2019re seeing in China. But our expectation in the decline from Q3 to Q4 is mostly driven from the demand signal that we\u2019re seeing with that inventory reduction layered on top of it.<\/p>\n

Salem Salem<\/span><\/strong><\/p>\n

Great, that\u2019s helpful. Thank you. And then on prioritizing the Xenium launch, it seems like that was kind of at the expense of Chromium. Could you provide a little more color there? Did that come from maybe incentives from the sales force towards placing boxes or any more color there? And then as you kind of balance back out and start to prioritize the Chromium again, what are kind of the risks to Xenium? And then kind of lastly on Xenium orders, how did those kind of trend through the quarter? And did those kind of outpace revenues? And that\u2019s it for me. Thank you.<\/p>\n

Serge Saxonov<\/span><\/strong><\/p>\n

Yeah. So in terms of the focus on Chromium, so on the commercial \u2013 sorry, on Xenium. So on the commercial side, there\u2019s \u2013 it\u2019s a number of things. First of all, most directly as their incentives to drive Xenium placements that certainly can direct it ourselves into to spend more attention there.<\/p>\n

We also \u2013 we have careful tracking now of how our commercial team where they spend the time and how they allocate their attention. And we were certainly encouraging them to make sure that the Xenium takes first priority. Also in terms of the resources, in terms of marketing resources, we put a lot of that on Xenium as well. And now going forward, we\u2019re kind of rebalancing these things, both in terms of the resources in terms of attention in terms of incentives.<\/p>\n

Another kind of factor over the course of this year that has led to this dynamic is that, we have built out a separate function, overlay function in our commercial team for driving Xenium sales specialists. And to some extent, it takes more effort to get \u2013 to launch a product and get it on that trajectory going forward in terms of creating the right infrastructure and creating the right trajectory of demand. And that\u2019s what we went through this last year.<\/p>\n

Now going forward, we feel like we are over that initial hurdle, and we have the flexibility to balance our attention and our focus and put more resources now more attention behind Chromium. While at the same time, driving the rapid progress of Xenium. And so, we feel good about the kind of the balance of attention going forward.<\/p>\n

But of course, we\u2019re going to need to watch it. And internally, we have a lot of metrics to help us stay very closely on top of these dynamics. And as far as Xenium traction is concerned, like I mentioned, we sold more than 80 and in the meantime, our backlog grew. So, we feel very good about where \u2013 how the quarter progressed.<\/p>\n

Operator<\/strong><\/p>\n

Thank you for your question. The next question is from the line of Tejas Savant. Your line is live.<\/p>\n

Tejas Savant<\/span><\/strong><\/p>\n

Hey, guys. Good evening and thanks for the time here. Serge, one for you on the Xenium pipeline. You mentioned the multimodal cell segmentation, the 5K-plex and then the high-plex protein assay on the same tissue section. So, in terms of how you see these three capabilities impacting your Xenium order book next year? Any color you can share there? And then just as a point of clarification, is that last one essentially true co-detection?<\/p>\n

Serge Saxonov<\/span><\/strong><\/p>\n

True co-detection, sorry, Tejas, I didn\u2019t get the last one. Let me answer the question. The product launch questions general. Well, so I mean, first of all, just with the existing capabilities, there is obviously, tons of demand and a lot of enthusiasm for the product as it is. And we are certainly \u2013 we feel really, really good about the capabilities and what the customers are getting from the product.<\/p>\n

At the same time, as historically, we\u2019ve always been very, very keen to listen to our customers and we stay on top of the initial feedback and react to that feedback very quickly to deliver new capabilities and to prioritize the features that customers find most valuable. And that\u2019s what we\u2019re doing again here. That\u2019s why segmentation is coming very soon.<\/p>\n

That\u2019s why we\u2019re coming out with a large plex panel. And we are excited about co-detection of proteins on the same tissue. I think that\u2019s going to be a powerful capability. I do want to point out that, if you \u2013 one can detect protein already using immunofluorescence on the same tissue and our customers definitely see huge value in that already.<\/p>\n

Tejas Savant<\/span><\/strong><\/p>\n

Got it. That\u2019s helpful, actually. And that\u2019s exactly where it\u2019s going with the co-detection bid. And then, Justin, one for you on that sort of $29 million of quarter-over-quarter step-up in the fourth quarter. You talked about Americas and EMEA strength there or rather the sequential uptick similar to last year. Is that sort of essentially year-end budget flush dynamic that you\u2019re assuming here? Or is it sort of the Xenium product cycle that underpins your confidence there or a bit of both?<\/p>\n

Justin McAnear<\/span><\/strong><\/p>\n

Yeah. Great question, Tejas. So at the midpoint of our guidance range, here\u2019s the basic assumptions, is that, on the Xenium side that we would ship, sell roughly the same amount of Xenium in Q4 than we did in Q3. And then as far as products, excluding Xenium instruments that we would have the same kind of seasonality that we\u2019ve seen previously. And so that would include a year-end budget flush.<\/p>\n

When you\u2019re looking at the range of our guidance from the low end to the high end, at the lower end would be not the same kind of budget flush that we\u2019ve seen before or not being able to ramp \u2013 not being able to maintain the Xenium ramp in Q4 as we saw in Q3 for any number of issues. And then, at the higher end would be over-delivering on Xenium in Q4 and perhaps seeing a stronger year-end budget flush than we\u2019ve seen historically or perhaps not seeing the decline in APAC, primarily driven by China that we\u2019ve got built into the midpoint.<\/p>\n

Tejas Savant<\/span><\/strong><\/p>\n

Got it. Super helpful. Thanks for the time, guys.<\/p>\n

Operator<\/strong><\/p>\n

Thank you for your question. Our next question is from the line of John Sourbeer with UBS. Your line is live.<\/p>\n

John Sourbeer<\/span><\/strong><\/p>\n

Hi. Thanks for taking the questions. First one here on Chromium. Any color on where you see pricing on Consumables for next year? I think you had record increases this year. Do you think you can get similar levels in 2024?<\/p>\n

Serge Saxonov<\/span><\/strong><\/p>\n

So our plan for this year, the plan around Chromium pricing is pretty moderate price changes. And much of that is driven by the premise that there\u2019s tons and tons of potential demand in Chromium and we tend to gain a lot more ultimate growth by increasing number of samples, and increasing number of customers. And so that\u2019s where we\u2019re going to be focused to a large extent.<\/p>\n

John Sourbeer<\/span><\/strong><\/p>\n

Thanks. And then a follow-up here on Xenium. I guess, in the US and APAC, where you don\u2019t have an injunction. Just any color on competitive win rates there? And where do you think you\u2019re winning on what customer type or features versus competitors out there?<\/p>\n

Serge Saxonov<\/span><\/strong><\/p>\n

Yeah. So, just to be clear, the Xenium traction has been really strong across the world. And in fact, it has been particularly strong in the Americas, really, really strong momentum there. And as far as where we\u2019re winning, I would say it\u2019s across the board.<\/p>\n

I mean, the big evolution over the last couple of quarters has been that the Xenium systems have been out there in the field and have been performing really well, generating awesome data and the work has been spreading more on our customers and it\u2019s getting a lot of \u2013 I mean, issue to our field teams now to go and talk to the customers and make more sales.<\/p>\n

That has been the overwhelming story, and I don\u2019t think it\u2019s particular to any particular application or any particular geography or any particular customer type. It is real and across the board kind of phenomenon.<\/p>\n

John Sourbeer<\/span><\/strong><\/p>\n

Thanks for taking the questions.<\/p>\n

Operator<\/strong><\/p>\n

Thank you for your question. Our next question is from the line of Mason Carrico with Stephens. Your line is live.<\/p>\n

Mason Carrico<\/span><\/strong><\/p>\n

Hey. Thanks. I\u2019m jumping between a few calls tonight. So sorry if this has been asked. I\u2019ll just ask one here. Could you talk about your outlook for Xenium pricing going forward? Do you plan on continuing to be accommodative and somewhat flexible with pricing given the opportunity to capture these customers and kind of lock them in? Or how should we be thinking about pricing going forward?<\/p>\n

Justin McAnear<\/span><\/strong><\/p>\n

Yeah. Mason, I\u2019ll take that one to start. I think back to when we launched Xenium. It was a very, very competitive and still is a very competitive environment, a lot of noise out there and not a lot of data. And so, we launched Xenium with introductory pricing, basically to encourage adoption and make sure that there was less friction getting the instrument in hands of those early users that could generate the data that could help drive future sales.<\/p>\n

And so, as time has progressed and we are starting to see more data come off the instrument, the results of the head-to-head study that we saw mentioned in the prepared remarks and other customers presenting data that they\u2019ve run on their own instruments in their labs. This is really showing the true value of the platform. And so, we are confident moving away from the introductory pricing at a lower price point. And we took the list price up in this past quarter.<\/p>\n

Now, the average selling price is still trending below the list price, and we\u2019ll continue to do so because, as you mentioned, we\u2019re very \u2013 we are open to working with customers around packaged deals with other instruments and also taking reductions off the list price of the instrument for customers that couple that with a larger Consumable order.<\/p>\n

Mason Carrico<\/span><\/strong><\/p>\n

Got it. Thanks, Justin, I appreciate it.<\/p>\n

Operator<\/strong><\/p>\n

Thank you for your question. Our next question is from the line of Michael Ryskin with Bank of America. Your line is live.<\/p>\n

Michael Ryskin<\/span><\/strong><\/p>\n

Great. Thanks for squeezing me in guys. I\u2019m going to ask two hopefully quick ones, sort of tidying up some points from earlier. One, on the gross margins and gross profit in the third quarter. I know you guys have said a number of times that the Xenium instrument ramp, but still, the drop off to 62% was steeper than we anticipated. And if I just look at it on a gross profit dollar basis, sequentially, last quarter you guys had $99.6 million, now it\u2019s $95 million.<\/p>\n

So you got $4 million less gross profit despite the higher revenues and despite Chromium essentially being flat sequentially. So, I\u2019m just trying to do the math on that. Was there some discounting in the quarter, some inventory functions there? Or I just don\u2019t see how it could be \u2013 how Xenium could be that dilutive to margins or if something else\u2019s going on? What am I missing here?<\/p>\n

Justin McAnear<\/span><\/strong><\/p>\n

Yeah. Good question, Mike. When you look both year-over-year and sequentially, maybe I\u2019ll just start with year-over-year and then I\u2019ll get to the sequential piece. But, if you look back to a year ago, and you look at the margin that we had and what we\u2019ve declined to this year. Practically all of that variance is due to Xenium. And so, if you were to exclude Xenium and calculate the gross margin, it would be roughly the same as it was a year ago.<\/p>\n

And so, then sequentially, there\u2019s also been a mix towards Xenium instruments. There\u2019s been a mix towards more instruments overall. There\u2019s also been a mix to more \u2013 higher increases in the service line as well. And so when we install and train on Xenium, that portion gets booked into service, and that\u2019s also lower margin as well. But nothing \u2013 yeah so nothing fundamentally has changed about our cost structure that would be outside of the product mix that we\u2019ve talked about, driven by the increase in Xenium.<\/p>\n

Michael Ryskin<\/span><\/strong><\/p>\n

Okay. All right. I\u2019ll redo the math again, directionally, no surprise, but just surprised the magnitude. And then follow-up again on the Chromium Consumables. I know you guys have been giving the sort of ex-China or specifically Americas and EMEA number. But sometimes you give the quarter and sometimes you give the year-to-date.<\/p>\n

So I think my notes got a little mixed up. Did you say that year-to-date, that Americas and EMEA Chromium Consumables is mid-to-high teens. What was it 1Q and 2Q just so we have like the sequential numbers? I\u2019m just trying to see if it accelerated or decelerated as you\u2019ve gone through?<\/p>\n

Justin McAnear<\/span><\/strong><\/p>\n

Yes. So Mike, we provide that just to give some additional color as far as the regional breakout by product. But year-to-date Chromium overall has been in the low-teens, AMR EMEA. If you look at Chromium Consumables year-to-date, that\u2019s been in the mid-to-high teens. And when you look at Q1 and Q2 this year, it was easier compares to the prior period a year ago. So those rates have increased were higher.<\/p>\n

Michael Ryskin<\/span><\/strong><\/p>\n

Thank you. I appreciate the clarification. Thanks guys.<\/p>\n

Operator<\/strong><\/p>\n

Thanks for your question. Our next question is from the line of Justin Bowers with Deutsche Bank. Your line is live.<\/p>\n

Justin Bowers<\/span><\/strong><\/p>\n

Hi, good afternoon. So just two quick ones for me. In terms of Xenium, are you starting to see some \u2013 repeat customers in the order book there? And then, just taking a step back in the academic landscape, are you starting to see like sort of \u2013 can you paint a picture of what sort of new core lab activity is around Single Cell and Spatial more broadly or even regionally? Thank you.<\/p>\n

Serge Saxonov<\/span><\/strong><\/p>\n

Yeah, Justin. So to the first question on Xenium and whether we\u2019re seeing repeat customers. So that, I mean, the answer is yes, for sure. Relatively speaking, is still very much new customers. That\u2019s what we\u2019re about. That\u2019s where we\u2019re focused to get sales. But we\u2019ve seen multiple instances, and this is always really gratifying when a customer has gotten their instrument.<\/p>\n

They have run their samples and then after seeing the results from those first front, getting ordering another instrument. And in fact, we\u2019ve seen more examples of that where people would run studies get biological results. And on the basis of that biology go back and buy another Xenium. So, probably the best measure of how something is performing when you see this kind of repeat business from customers. So very gratifying for us to see.<\/p>\n

As far as like a demand, just random or core labs, I mean, those generally tend to be fairly consistent. We do see decent adoption with the core labs around the world is kind of puts and takes, some core labs have issues with having enough staff to run experiments and some core labs have sort of other issues. But overall, no major trends to call out here.<\/p>\n

Justin Bowers<\/span><\/strong><\/p>\n

Appreciate it.<\/p>\n

Operator<\/strong><\/p>\n

Thank you for your questions. Our next question is from the line of Rachel Vatnsdal with JPMorgan. Your line is live.<\/p>\n

Rachel Vatnsdal<\/span><\/strong><\/p>\n

Great. Thank you for taking the questions. And good afternoon. First off, I just want to clarify your comment around the 80 Xenium in this quarter. Was that comment around 80 instruments sold? Or was that more around the number of instruments shipped this quarter? And then you mentioned backlog grew for Xenium. So how long is the backlog at this point?<\/p>\n

Justin McAnear<\/span><\/strong><\/p>\n

Hi, Rachel, this is Justin. We \u2013 yeah, so that\u2019s what we shipped this quarter was over \u2013 we shipped over 80 Xenium. We sold over 80 Xenium and we grew the backlog on top of that.<\/p>\n

Rachel Vatnsdal<\/span><\/strong><\/p>\n

Okay, that\u2019s helpful. And then just on China, can you walk us through how the region trended really throughout the quarter? Also, how has October trended relative to September and the rest of 3Q? And then can you just frame up some potential scenarios for China for 2024 next year? Is it really possible for that region to hold flat without any stimulus support? And that\u2019s it for me. Thank you.<\/p>\n

Justin McAnear<\/span><\/strong><\/p>\n

As far as how China has trended throughout Q3, I think it came in line generally with what we called out in our last earnings call, when we said that we expected China in Q3 and Q4 to be roughly flat to Q2, and that\u2019s how it came in. Ordering patterns in China just due to the consolidation of volumes through distributors and service providers can be somewhat lumpy.<\/p>\n

As far as looking at Q4, from the demand signal that we\u2019re seeing, we are calling a decline right now going from Q3 into Q4. But that is mostly driven with our targeted inventory reductions that we\u2019re driving with the service providers. So the actual demand, at least from what we can tell right now is more than we expected our revenues in Q4 would reflect.<\/p>\n

Rachel Vatnsdal<\/span><\/strong><\/p>\n

Great. And then just frame up on 2024 for China?<\/p>\n

Justin McAnear<\/span><\/strong><\/p>\n

Well, like I said, hesitate to call the bottom right now. So we\u2019ll have to see on 2024. We\u2019ll have to see how the rest of Q4 progresses.<\/p>\n

Rachel Vatnsdal<\/span><\/strong><\/p>\n

Fair enough. Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you for your question. Our final question for today will come from the line of Matt Sykes from Goldman Sachs. Your line is live.<\/p>\n

Unidentified Participant<\/span><\/strong><\/p>\n

Hi. This is Ivy on for Matt. Thanks for taking my questions. You gave some color on competition and wins with Xenium, but are there any changes to the environment within Chromium maybe within the different regions and customer types?<\/p>\n

Serge Saxonov<\/span><\/strong><\/p>\n

Yeah. I don\u2019t think there\u2019s anything in particular that\u2019s material that has changed in the Chromium business. We see \u2013 the environment only \u2013 the CapEx environment has been tighter recently for sure, especially outside of the US, and we\u2019re definitely seeing the effects of that.<\/p>\n

Again, I think there\u2019s sort of the underlying demand on the Xenium side has kind of broken through a lot of that, but we do see the CapEx constraints manifesting themselves out there. There\u2019s also \u2013 biopharma has been somewhat pressured and we\u2019re seeing some impact from that. We saw it in Q3, like we\u2019re seeing it in Q4 as well. But overall, I wouldn\u2019t call out any other really big trends on the Chromium side.<\/p>\n

Unidentified Participant<\/span><\/strong><\/p>\n

Okay, great. That\u2019s helpful. And then on Xenium pricing, I know you said you increased your list price. But could you talk through when you might start to roll off some of the discounts in the Xenium instruments? Or do you see that continuing for the near future?<\/p>\n

Justin McAnear<\/span><\/strong><\/p>\n

We\u2019re always open to working with customers to get an instrument in their hand and get them using that instrument. As we\u2019ve talked about before, the strategy and the value with Xenium is the Consumable revenue streams. And so, if we compare an order for an instrument with a larger Consumable order, we\u2019ll take a deeper discount on the instrument just to get that out there and get that instrument being used.<\/p>\n

Unidentified Participant<\/span><\/strong><\/p>\n

Okay, great. Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you for your question. And, ladies and gentlemen, that will conclude today\u2019s 10x Genomics third quarter 2023 earnings conference call. Thank you all for attending. Have a great night.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

10x Genomics, Inc. (NASDAQ:TXG) Q3 2023 Earnings Conference Call November 2, 2023 4:30 PM ET Company Participants Cassie Corneau – Director, Investor Relations and Strategic Finance Serge Saxonov – CEO and Co-Founder Justin McAnear – Chief Financial Officer Conference Call Participants Patrick Donnelly – Citi Dan Arias – Stifel Kyle Mikson – Canaccord Genuity Dan […]<\/p>\n","protected":false},"author":1,"featured_media":613,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-80046","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"\n10x Genomics, Inc. (TXG) Q3 2023 Earnings Call Transcript | iFintechWorld<\/title>\n<meta name=\"description\" content=\"10x Genomics, Inc. (NASDAQ:TXG) Q3 2023 Earnings Conference Call November 2, 2023 4:30 PM ET Company Participants Cassie Corneau - Director, Investor\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=80046\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"10x Genomics, Inc. (TXG) Q3 2023 Earnings Call Transcript | iFintechWorld\" \/>\n<meta property=\"og:description\" content=\"10x Genomics, Inc. (NASDAQ:TXG) Q3 2023 Earnings Conference Call November 2, 2023 4:30 PM ET Company Participants Cassie Corneau - Director, Investor\" \/>\n<meta property=\"og:url\" content=\"https:\/\/ifintechworld.com\/?p=80046\" \/>\n<meta property=\"og:site_name\" content=\"iFintechWorld\" \/>\n<meta property=\"article:published_time\" content=\"2023-11-03T03:30:51+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-11-03T03:30:54+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/og_image_1200-29b2bfe1a595477db6826bd2126c63ac2091efb7ec76347a8e7f81ba17e3de6c.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"1200\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"News Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"News Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"50 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/ifintechworld.com\/?p=80046#article\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=80046\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\"},\"headline\":\"10x Genomics, Inc. (TXG) Q3 2023 Earnings Call Transcript\",\"datePublished\":\"2023-11-03T03:30:51+00:00\",\"dateModified\":\"2023-11-03T03:30:54+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=80046\"},\"wordCount\":10008,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"keywords\":[\"Featured\"],\"articleSection\":[\"News\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/ifintechworld.com\/?p=80046#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/ifintechworld.com\/?p=80046\",\"url\":\"https:\/\/ifintechworld.com\/?p=80046\",\"name\":\"10x Genomics, Inc. (TXG) Q3 2023 Earnings Call Transcript | iFintechWorld\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/#website\"},\"datePublished\":\"2023-11-03T03:30:51+00:00\",\"dateModified\":\"2023-11-03T03:30:54+00:00\",\"description\":\"10x Genomics, Inc. (NASDAQ:TXG) Q3 2023 Earnings Conference Call November 2, 2023 4:30 PM ET Company Participants Cassie Corneau - Director, Investor\",\"breadcrumb\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=80046#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/ifintechworld.com\/?p=80046\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/ifintechworld.com\/?p=80046#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/ifintechworld.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"10x Genomics, Inc. (TXG) Q3 2023 Earnings Call Transcript\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/ifintechworld.com\/#website\",\"url\":\"https:\/\/ifintechworld.com\/\",\"name\":\"Repay Down\",\"description\":\"Latest Personal Finance News, Tips and Updates\",\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/ifintechworld.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/ifintechworld.com\/#organization\",\"name\":\"Repay Down\",\"url\":\"https:\/\/ifintechworld.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"width\":558,\"height\":90,\"caption\":\"Repay Down\"},\"image\":{\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\",\"name\":\"News Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"caption\":\"News Room\"},\"sameAs\":[\"https:\/\/ifintechworld.com\"],\"url\":\"https:\/\/ifintechworld.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"10x Genomics, Inc. (TXG) Q3 2023 Earnings Call Transcript | iFintechWorld","description":"10x Genomics, Inc. (NASDAQ:TXG) Q3 2023 Earnings Conference Call November 2, 2023 4:30 PM ET Company Participants Cassie Corneau - Director, Investor","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/ifintechworld.com\/?p=80046","og_locale":"en_US","og_type":"article","og_title":"10x Genomics, Inc. (TXG) Q3 2023 Earnings Call Transcript | iFintechWorld","og_description":"10x Genomics, Inc. (NASDAQ:TXG) Q3 2023 Earnings Conference Call November 2, 2023 4:30 PM ET Company Participants Cassie Corneau - Director, Investor","og_url":"https:\/\/ifintechworld.com\/?p=80046","og_site_name":"iFintechWorld","article_published_time":"2023-11-03T03:30:51+00:00","article_modified_time":"2023-11-03T03:30:54+00:00","og_image":[{"width":1200,"height":1200,"url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/og_image_1200-29b2bfe1a595477db6826bd2126c63ac2091efb7ec76347a8e7f81ba17e3de6c.png","type":"image\/png"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"50 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/ifintechworld.com\/?p=80046#article","isPartOf":{"@id":"https:\/\/ifintechworld.com\/?p=80046"},"author":{"name":"News Room","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61"},"headline":"10x Genomics, Inc. (TXG) Q3 2023 Earnings Call Transcript","datePublished":"2023-11-03T03:30:51+00:00","dateModified":"2023-11-03T03:30:54+00:00","mainEntityOfPage":{"@id":"https:\/\/ifintechworld.com\/?p=80046"},"wordCount":10008,"commentCount":0,"publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"keywords":["Featured"],"articleSection":["News"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/ifintechworld.com\/?p=80046#respond"]}]},{"@type":"WebPage","@id":"https:\/\/ifintechworld.com\/?p=80046","url":"https:\/\/ifintechworld.com\/?p=80046","name":"10x Genomics, Inc. (TXG) Q3 2023 Earnings Call Transcript | iFintechWorld","isPartOf":{"@id":"https:\/\/ifintechworld.com\/#website"},"datePublished":"2023-11-03T03:30:51+00:00","dateModified":"2023-11-03T03:30:54+00:00","description":"10x Genomics, Inc. (NASDAQ:TXG) Q3 2023 Earnings Conference Call November 2, 2023 4:30 PM ET Company Participants Cassie Corneau - Director, Investor","breadcrumb":{"@id":"https:\/\/ifintechworld.com\/?p=80046#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/ifintechworld.com\/?p=80046"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/ifintechworld.com\/?p=80046#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/ifintechworld.com\/"},{"@type":"ListItem","position":2,"name":"10x Genomics, Inc. (TXG) Q3 2023 Earnings Call Transcript"}]},{"@type":"WebSite","@id":"https:\/\/ifintechworld.com\/#website","url":"https:\/\/ifintechworld.com\/","name":"Repay Down","description":"Latest Personal Finance News, Tips and Updates","publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/ifintechworld.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/ifintechworld.com\/#organization","name":"Repay Down","url":"https:\/\/ifintechworld.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","width":558,"height":90,"caption":"Repay Down"},"image":{"@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61","name":"News Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","caption":"News Room"},"sameAs":["https:\/\/ifintechworld.com"],"url":"https:\/\/ifintechworld.com\/?author=1"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/80046","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=80046"}],"version-history":[{"count":1,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/80046\/revisions"}],"predecessor-version":[{"id":80047,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/80046\/revisions\/80047"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/media\/613"}],"wp:attachment":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=80046"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=80046"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=80046"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}